MSM Q1 Earnings Beat, Dips Y/Y on Low Volumes & Higher Expenses

MSC Industrial (MSM) reported $928.48 million in revenue for the quarter ended November 2024, representing a year-over-year decline of 2.7%. EPS of $0.86 for the same period compares to $1.25 a year ago.

The reported revenue represents a surprise of +2.59% over the Zacks Consensus Estimate of $905.01 million. With the consensus EPS estimate being $0.73, the EPS surprise was +17.81%.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how MSC Industrial performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Sales Days: 62 compared to the 62 average estimate based on eight analysts.
• Total Company ADS Percent Change: -2.7% versus the seven-analyst average estimate of -5.3%.
• Average Daily Sales (ADS): $15 million compared to the $14.59 million average estimate based on six analysts.
• Days Sales Outstanding: 41 versus 40 estimated by two analysts on average.

View all Key Company Metrics for MSC Industrial here>>>

Shares of MSC Industrial have returned -5.3% over the past month versus the Zacks S&P 500 composite's -2.8% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.

Zacks Investment Research

AZZ Inc. AZZ reported third-quarter fiscal 2025 (ended Nov. 30, 2024) earnings of $1.39 per share, which beat the Zacks Consensus Estimate of $1.29. The bottom line increased 16.8% year over year.

Total revenues of $403.7 million outperformed the consensus estimate of $400 million. The top line rose 5.8% year over year, driven by market share growth and improvements from mix shifts in end markets, including construction, HVAC and transportation.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

AZZ’s Segmental Results

The company has two reportable segments: Metal Coatings and Precoat Metals.

Revenues from the Metal Coatings segment (representing 41.8% of the quarter’s net revenues) totaled $168.6 million, up 3.3% year over year. The consensus estimate for Metal Coatings’ revenues was pegged at $169 million.

Revenues from the Precoat Metals segment (representing 58.2% of the quarter’s net revenues) totaled $235.1 million, up 7.6% year over year. The consensus estimate was pegged at $235 million.

AZZ Inc. Price, Consensus and EPS Surprise

AZZ Inc. price-consensus-eps-surprise-chart | AZZ Inc. Quote

AZZ’s Margin Profile

AZZ’s cost of sales increased 4.2% year over year to $305.9 million. The gross profit was up 10.9% year over year to $97.8 million. The adjusted gross margin was 24.2% compared with 23.1% in the year-ago period.

Selling, general and administrative expenses increased 11.1% year over year to $35.3 million. Adjusted EBITDA increased 5% year over year to $90.7 million.

AZZ’s Balance Sheet and Cash Flow

Exiting the fiscal third quarter, AZZ had a cash balance of $1.5 million compared with $4.3 million at the end of fiscal 2024. Long-term debt was $879.5 million at the end of the fiscal quarter.

In the first nine months of fiscal 2025, the company generated net cash of $185.6 million from operating activities compared with $180.9 million in the year-ago period. Capital spent on purchasing property, plant and equipment was $85.9 million, up 28.5% on a year-over-year basis.

AZZ’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.

Gates Industrial Corporation plc GTES currently carries a Zacks Rank #2 (Buy). GTES delivered a trailing four-quarter average earnings surprise of 11.8%.

In the past 60 days, the Zacks Consensus Estimate for Gates Industrial’s 2024 earnings has remained unchanged.

Generac Holdings Inc. GNRC presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.8%.

The Zacks Consensus Estimate for GNRC’s 2024 earnings has increased 0.6% in the past 60 days.

Zacks Investment Research

MSC Industrial (MSM) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.73 per share. This compares to earnings of $1.25 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 17.81%. A quarter ago, it was expected that this distributor of industrial tools and supplies would post earnings of $1.08 per share when it actually produced earnings of $1.03, delivering a surprise of -4.63%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

MSC Industrial, which belongs to the Zacks Industrial Services industry, posted revenues of $928.48 million for the quarter ended November 2024, surpassing the Zacks Consensus Estimate by 2.59%. This compares to year-ago revenues of $953.97 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

MSC Industrial shares have added about 6.9% since the beginning of the year versus the S&P 500's gain of 0.5%.

What's Next for MSC Industrial?

While MSC Industrial has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for MSC Industrial: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.72 on $906.7 million in revenues for the coming quarter and $3.59 on $3.77 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Industrial Services is currently in the bottom 8% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, W.W. Grainger (GWW), has yet to report results for the quarter ended December 2024. The results are expected to be released on January 31.

This seller of maintenance and other supplies is expected to post quarterly earnings of $9.77 per share in its upcoming report, which represents a year-over-year change of +17.3%. The consensus EPS estimate for the quarter has been revised 0% higher over the last 30 days to the current level.

W.W. Grainger's revenues are expected to be $4.24 billion, up 6% from the year-ago quarter.

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